A former executive of Chinese firm Hanlong Mining has been sentenced to more than 2 years in jail for using inside information to profit from share trading. Calvin Zhu pleaded guity to being a serial insider trader. He was sentenced by the NSW Supreme Court and got a reduced sentence because he cooperated with authorities.

Transcript

TIM PALMER: A former executive of a Chinese mining company has been sentenced to jail for insider trading.

In Sydney's Supreme Court, Calvin Zhu admitted he was a serial inside trader who made profits for himself and associates using inside information relating to planned takeover bids.

For more, I joined by finance reporter Sue Lannin.

Sue, what did the court decide?

SUE LANNIN: Well we saw Justice Peter Hall in the New South Wales Supreme Court sentence Calvin Zhu to two years and three months in jail.

So he will serve a minimum of 15 months in jail. He's expected to be released in May, 2014. That's based on good behaviour. Now the judge stressed how serious the offence was.

Mr Zhu pleaded guilty to three counts of insider trading. He made profits for himself and his associates of more than $1.3 million, as you said, using inside information for planned takeover bids.

He actually got friends, including his mother-in-law, to buy shares and then sell shares, when he gave them the information.

He made about $370,000.

The judge took into account that Mr Zhu was very remorseful, he cooperated with authorities. In fact, the only reason ASIC, the corporate regulator, has got this conviction is because they had a confession.

Their market surveillance team noticed there were strange trades going on, they tracked down Mr Zhu, he ended up confessing and admitted it. And because he made an early guilty plea, they've got this conviction.

TIM PALMER: Yes, because in the past insider trading cases have shown themselves to be extraordinarily difficult for ASIC to prove. So what's the background to this one?

SUE LANNIN: Well this one, Mr Zhu has worked in the investment banking and corporate field for some years. He's only young. He's only in his 30s. He worked for three firms including the investment bank Credit Suisse and the Chinese firm Hanlong Mining. In fact, he started insider trading in 2006.

Now investigations are continuing in regards to three other people that were involved with Mr Zhu at Hanlong Mining. Now, that included the former managing director of Hanlong Mining in Australia, the former chief operating officer and the former chief financial officer.

They basically set up an investment fund that was based in Hong Kong that was their private investment fund. They were involved in takeover bids for Bannerman Resources, which is a uranium miner, and Sundance Resources, which is an iron ore miner. They got their associates to buy the shares just before the takeover bids were made. And then once they were made and the shares went up, they sold the shares.

So in fact ASIC is still continuing investigations into these other people. One of, the ring leader, Mr Steven Xiao, the judge called him a domineering personality, he's actually fled to China.

Now Mr Zhu said in his submissions to the court that he deeply regretted the offences. He said he didn't have the courage though to stand up to Mr Xiao and he said that he had become accustomed to a lavish lifestyle.

TIM PALMER: It's all ended now, it appears. Mark one up to ASIC at least. Sue Lannin thanks for filling us in.